What is the project npv

Assignment Help Finance Basics
Reference no: EM131238322

Cows-R-Us is considering a proposal to manufacture a new cow feed. The project would require an investment in $1.2 million worth of equipment. Itwould be depreciated straight-line over 10 years. The company prefers to look atprojects over not longer than 8 years, so they assume that there'd be a residualvalue of $400,000 at the end of year 8. The project would require $350,000 of additional working capital. Thereafter,working capital would be expected to be 10% of sales. Year 1 sales are expected to be $4.2 million and grow by 5% per year. Cost of goodssold is 90% of sales and the tax rate is 35%. The cost of capital is 12%This project would make use of an existing facility, which is currently rented out to aneighboring firm. Next year's rental of that facility is $100,000 and thereafter therental would be expected to grow at 4%. What is the project's NPV? Note, the tax on the sale at year 8 should reflect the following: the original cost lessall depreciation gives a new basis. That basis is subtracted from the sales price.

Reference no: EM131238322

Questions Cloud

Can personality be assessed : The Performance Consultant's Fieldbook provides important details for effectively measuring results after an intervention. Imagine that you are coaching a new I-O consultant on the importance of measuring results. Provide three specific tips to en..
To guarantee the detection of up to 5 errors in all cases : To guarantee the detection of up to 5 errors in all cases, the minimum Hamming distance in a block code must be. In a linear block code, the of any two valid code words creates another valid codeword.
What is the role of the variable resistor and capacitor : What is the role of the variable resistor and capacitor? The 555 timer has a DIL layout. What does DIL mean? How many types of multi vibrator circuits are there? Define Monostable Multivibrator.
What is the practical use of astable multivibrator : What is the practical use of astable multivibrator? Define Register. How many types are there? List the applications of 555 timer in monostable mode of operation. List the applications of 555 timer in Astable mode of operation. Mention some applic..
What is the project npv : What is the project's NPV? Note, the tax on the sale at year 8 should reflect the following: the original cost lessall depreciation gives a new basis. That basis is subtracted from the sales price.
What is unique about ttl devices such as the 74sxx : What is unique about TTL devices such as the 74SXX? What should be done to unused inputs on TTL gates? How the data can be changed from special code to temporal code? Which logic family is the fastest among the TTL, ECL, CMOS, and why?
Determine the maximum growth rate : Given the following information, determine the maximum growth rate the company could achieve before it had to increase its fixed assets.
What is the range of invalid ttl output voltage : Which digital logic family has the lowest propagation delay time and why? In digital IC, why Schottky transistors are preferred over normal transistors? What is the range of invalid TTL output voltage?
Did you learn anything new or does it confirm what you know : Summarize with major details in the article in one or two paragraphs. Write your comments/thoughts about the article. What do you think? Do you agree or disagree with the theme, outcome or recommendations? Did you learn anything new or does it co..

Reviews

Write a Review

Finance Basics Questions & Answers

  Financial reporting and analysis

Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..

  A report on financial accounting

This report is specific for a core understanding for Financial Accounting and its relevant factors.

  Describe the types of financial ratios

Describe the types of financial ratios and other financial performance measures that are used during venture's successful life cycle.

  Differences between sole proprietorship and corporation

Briefly describe the major differences between a sole proprietorship and a corporation

  Prepare a cash budget statement

Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month

  What are the implied interest rates

What are the implied interest rates in Europe and the U.S.?

  State pricing theory and no-arbitrage pricing theory

State pricing theory and no-arbitrage pricing theory

  Small business administration

Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.

  Effect of financial leverage

The Effect of Financial Leverage and working capital management

  Evaluate the basis for the payment to the lender

Evaluate the basis for the payment to the lender and basis for the payment to the company-counterparty.

  Importance of opps, ipps, mpfs and dmepos

Research and discuss the differences and importance of : OPPS, IPPS, MPFS and DMEPOS.

  Time value of money

Time Value of Money project

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd